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National carrier Air India is poised to achieve an operational profit by March 2016, a feat not only unheard of in the past ten years but also two years ahead of the target due to better financial management among other factors.
“We are hoping to achieve the operational profit of Rs 6.5 crore, though small, in 2016, which was to be achieved in 2018 as per the original turnaround targets,” Air India chairman and managing director Rohit Nandan said here on Friday.
Better financial discipline, not entering the price wars, reduction in fuel costs by 25 per cent after the introduction of Boeing 787s, not loosing a single man hour in strikes... have helped the ailing company to fast track its recovery, according to Rohit Nandan. However, fuel prices and dollar rates still played a key role in staying the course, he said.
The public sector airline company had run into Rs 30,000 crore of accumulated losses and at some point had lost the hope of any recovery. The signals of revival have made the company more confident in achieving the full turnaround ahead of the time lines determined in the restructuring plan put in place for the company.
“We always have confidence in Air India and its employees,” said Union Civil Aviation Minister P Ashok Gajapati Raju while inaugurating the Air India’s first indigenously built aircraft maintenance repair and overhaul(MRO) facility at the Hyderabad International Airport. The completion of this greenfield MRO facility, which was almost decided to shelve mid-way owing to Air India’s financial troubles, was a testimony to the change, he said.
The minister further said the Centre and the state governments would help the aviation industry by doing away with tax impediments even to tap the $ 700 million MRO business as well as restart the aviation activity in about 31 airports, which remained idle for the past one and half years across the country.
Tax breaks for MROs in service tax and customs duty are being examined by the Finance Minister Arun Jaitley, according to the Union Civil Aviation Minister.
“Hyderabad can become a power house of MRO activity for the entire South Asia together with GMR’s facility and Air India’s facility,” he said. The company had spent little over Rs 79 crore in building this facility.
Meanwhile, the airline company's replacement plan for the old aircraft has also started, according to Air India chief.
The company had proposed to replace 72 old aircraft with new ATRs. While it had placed orders for 8 ATRs of which two had already arrived, according to him.
